The bull market trap worries about sweeping the Bitcoin market, because BTC draws the CME gap below $40,000


Bitcoin price rose to 40,000 USD (Bitcoin) Since the Chicago Mercantile Exchange futures opened on Monday with a gap of US$1,575, which is the first time since May 17, the market is at risk of weakness.

In retrospect, due to Bitcoin’s recent bearish correction near $40,000, the downside risks have increased. Most importantly, the aforementioned CME gap was formed between the closing price of $37,325 on Friday and the opening price of $38,900 on Monday, which increases the possibility that the next correction will cause the bitcoin bid to fall to at least $37,325.

This is due to the general psychological perception of traders BTC/USD reversal trend Fill more than 90% of the vacancies in Bitcoin futures. So, for example, traders partially filled the gap that appeared in the trading hours on the weekend of April 17-18, 11 days later.

Similarly, in May 2020, the missing weekend candles between US$8,795 and US$10,010 were filled immediately after formation.

The purple line represents the CME Bitcoin futures gap that has been filled, and the black line represents the unfilled gap. Source: TradingView

But throughout 2020 and into 2021, the supersonic upward trend of the Bitcoin market has left many missing price candles unfilled. The last such a large gap appeared during the long Christmas weekend last year. It was approximately US$2,900, between US$23,745 and US$26,650. It has not yet been filled. Similarly, another unfilled CME gap between US$18,020 and US$19,155 can be traced back to early December 2020.

The longest time for traders to fill the CME gap is three months-the missing price candle in focus appeared in June 2019 and was filled in September 2019.

It took three months for Bitcoin futures traders to fill the CME July 2019 gap. Source: TradingView

Fundamentals

Macroeconomic fundamentals played a huge role in keeping Bitcoin prices away from its lower CME gap between June and September 2019.First, many investors buy Bitcoin as their safe-haven asset because Sino-U.S. trade war Global economic growth and market sentiment are under pressure.

Second, with the launch of Libra, Facebook’s entry into the cryptocurrency field has created more upside opportunities for Bitcoin.

In 2020, the Fed’s open expansion policy provided bullish support for Bitcoin. After the global market crash in March 2020, the U.S. Central Bank reduced its benchmark lending rate to almost zero.

At the same time, the Federal Reserve Start buying government bonds And $120 billion in mortgage-backed securities every month. This has weakened investor interest in U.S. Treasury yields and the U.S. dollar, and has increased the attractiveness of Bitcoin, gold, and stocks as alternative safe havens.

Veteran investors including Stanley Druckenmiller and Paul Tudor Jones announced their exposure to the Bitcoin market after the Fed’s expansion.At the same time, Tesla, MicroStrategy, Square, Ruffer, Seetee and other companies also Add Bitcoin to their balance sheet, Citing inflation concerns.

To some extent, this prevented traders from filling the CME gap of US$23,745-26,650 and US$18,020-19,155, even five months after its formation.

A Twitter market analyst (known by the alias xCaeser of Planet of the Apes) also recommended that traders use $34,000 as the threshold level for determining the next market preference. In a tweet released after the price collapse on May 19, xCaeser famous Holding $34,000 as support will increase the potential for Bitcoin to rebound to $47,000. He added:

“If it breaks through $34,000, it will look for $23,300 and eventually fill the CME gap.”

Bitcoin fell below $34,000 several times after May 19, but after testing the $30,000-32,000 area as its support after each bearish trend, the cryptocurrency rebounded sharply.

Bullish gap ahead

After reaching nearly US$65,000 in mid-April, the price of Bitcoin fell due to profit-taking sentiment, while leaving a CME gap between US$49,215 and US$45,295. The missing price candles have not yet been filled.

This puts Bitcoin in a conflicting technical setting-that is, either Bitcoin is nearing the $40,000 resistance level and filling the $37,325-38,900 CME gap and then correcting downward, or it continues to move higher to fill the $45,295-49,215 CME. gap.

The transaction data obtained from the on-chain analysis platform CryptoQuant further shows the prejudice conflicts brewing in the Bitcoin market. In retrospect, the inflow and outflow of BTC has decreased in recent trading days. At the same time, the number of incoming addresses dropped, and outgoing addresses fell to a one-year low.

In addition, Elon Musk Announcing that Tesla will resume work Once the Bitcoin payment option “confirms that miners use clean energy reasonably (about 50%)”. The billionaire entrepreneur reacted to comments by Sygnia CEO Magda Wierzycka calling him a market manipulator.

related: Sygnia CEO criticizes Elon Musk for alleged Bitcoin skyrocketing and plummeting

Yuriy Mazur, head of CEX.IO Broker’s data analysis department, said: “After Musk’s comments, bitcoin prices have maintained good growth,” adding that this increases the potential of cryptocurrencies to fill the $45,295-49,215 CME gap. He told Cointelegraph:

“It seems that prices are falling from the highest level in the past 24 hours. If buyers affected by Musk decide to wake up the market, it may trigger an astonishing increase.”

On March 19, Musk’s tweet caused the price of Bitcoin to plummet from $43,500 to $30,000. His company Tesla still holds approximately $1.3 billion in BTC as a cash substitute.